Fed Chair Jerome Powell had earlier said the bank would continue to gradually lift rates in the face of a robust United States economy.
"It looks like it maybe calmed some nerves (of investors) who maybe were expecting a faster pace of hikes because of the rise in inflation", said Collin Martin, fixed income strategist at Schwab Center for Financial Research in NY.
In recent months, investors have debated whether the Fed, which has said it expects inflation to pick up, will accelerate its pace of rate increases to prevent the economy from overheating.
Investors are next focused on Friday's US employment report for April for further indications of the strength of the economy and inflation pressures.
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The Fed's latest "dot plot" now forecasts another two rate rises this year, although some analysts see three increases as possible.
The median estimate in the March report indicated three increases this year, but RDQ Economics said the forecasts should "show four rather than three rate hikes in total for 2018". It was Jerome Powell's second meeting as chairman since succeeding Janet Yellen earlier this year.
For 2018, the Fed predicts the U.S. economy will keep expanding at a "moderate" pace, hiring will remain strong, and inflation will "run near" the central bank's 2 per cent target, a notable change after years of low inflation.
In view of realized and expected labor market conditions and inflation, the Committee made a decision to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent. Just a few 2 years ago the yearly rate was almost zero. As rates rise, Americans feel it because their credit card rates also climb, as do the rate for mortgages, auto loans and small business loans.
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Under Powell's predecessors, Yellen and Ben Bernanke, the board endured criticism from some Republicans over its decision to pursue a bond purchase program created to cut long-term borrowing rates and to leave its key rate at a record low near zero for seven years.
Inflation is a growing concern as businesses are starting to raise prices. For years, the Fed has determined monetary policy based partly on the inflation level. That choice was seen as providing specialized expertise for Powell, who is not an economist.
The president's nominations generally match mainstream views on the Fed's proper role in managing rates.
It wasn't clear to what extent the Fed's statement contributed to the pullback, though the prospect of an accelerated pace of rate increases could eventually weigh down a stock market that has always been supported by ultra-low rates.
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Even if Trump's selections all win approval, he would still have one more vacancy to fill on the seven-member board.